Good news for bulls – Here's how the S&P 500 could soar to 4,700

In this sneak peek from the Action Alerts PLUS investing club, futures and commodities broker Carley Garner explains how the market could soar higher into the end of 2023, if the S&P 500 can maintain this key level. 

FULL VIDEO TRANSCRIPT BELOW: 

J.D. DURKIN: Carley, we spend a lot of time talking about the S&P 500 resistance levels here at AAP. And of course, back in July, you correctly called the market correction– I’m going to give you a hat tip, you could spike the football a bit, it’d be well deserved– you called the correction that we saw through October. But I wonder, is there a new level on your mind that maybe our members should also be aware of?

CARLEY GARNER: So there’s a couple of levels that I’m watching. And keep in mind, I’m following the E-mini S&P 500 futures. It’s a little bit different cash market. It’s adjusted for about 20, 30 points– futures are a little higher. What I’m looking for is as long as the market holds 4,300, 4,330 area on any downside correction that we might get in the next couple of days, or week, or so, I think the bulls are in Control

That’s kind of a level that we’ve picked out on a weekly chart to be a pivot between bullish and bearish. On a daily chart, I see pretty good resistance at 4,430 to 4,460. If we can get above 4,460, let’s say, in the next week or two, that, to me, is confirmation that the seasonal rally is in full swing.

And to be honest, when I look at a weekly chart, if we get above 4,460, I really don’t see anything stopping it until we get to 4,700, 4,730. So I know it sounds impossible now with the fundamental backdrop, but markets are momentum driven.

And I think a break above 4,460 puts us right around 4,700 maybe even by the end of the year. We’ll have to see how that goes, but I think it’s possible.

J.D. DURKIN: Carley, to the point of seasonality, we know how strong Q4 is historically for equities. And we’re not quite at the season to talk about a Santa Claus rally, but it’s not too far away. Are those kind of normal things that we look for also on your radar for this year?

CARLEY GARNER: It is. Absolutely. I think seasonality is playing a really big role in what happens going forward. Occasionally, we do get big selloffs this time of year, but it’s very rare. For example, in 2018, we saw the market not only refuse to the year end rally, but actually dropped very sharply, all the way into Christmas– I think it was Christmas Day or Christmas Eve.

Anyway, the odds are, on most years, markets go up this time of year. So it’s generally not a good idea to be working against that. And the interesting thing that generally goes under the radar is seasonality for treasuries is also very bullish. The Treasury market’s had a habit of bottoming in October.

In 2018, we had a capitulation bottom in October. In 2022, we saw the same thing. And in thus far in 2023, it looks like we may be getting exactly that. And if treasuries did bottom in October or somewhere sooner rather than later, that’s going to be a major tailwind for stocks.

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Daniel Kuhn

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Daniel Kuhn is the senior producer for distribution at TheStreet. Send Daniel an email here.